Employment Agreement
This Employment Agreement (this "Agreement") dated as of February
26, 2014 (the "Effective Date") is made by and between SCIENTIFIC
INDUSTRIES, INC., a Delaware corporation (the "Company") and XXXX
XXXXXXXXXXX, who resides at 000 Xxxxxxx Xx. Xxxxx Xxxxx XX 00000,
(the "Employee").
WITNESSETH:
WHEREAS, in connection with, and as a condition, to the
acquisition by the Company of certain assets of Fulcrum, Inc., a
New Jersey corporation ("Assignor"), relating to the research,
development, production, marketing and sale of the laboratory,
analytical and pharmacy balance and digital scale products, including
the Torbal DrX3 mechanical scale, pill counters, moisture analyzers,
industrial scales, force gauges, and related systems, methods and
processes (collectively, the "Scale and Balance Business") pursuant
to that certain Asset Purchase Agreement by and between the Company
and Fulcrum dated as of the date of the Effective Date (the "APA"),
the Company desires to have the benefit of the employment of Employee,
and Employee wishes to be so employed by the Company on the terms and
conditions hereinafter contained.
NOW, THEREFORE, it is hereby agreed as follows:
1. Employment: Employee is hereby employed as (i) President
of the Company's new Torbal Scales Division housing its Scale and
Balance Business and (ii) Director of Marketing of the Company for
the Term, as defined in Paragraph 2 below, to perform the duties
described in Paragraph 3 hereof.
2. Employment Term: Subject to the terms of Paragraph 7 below,
the term of employment of Employee by the Company pursuant to this
Agreement shall be for three years commencing on the Effective Date,
which may be extended by mutual agreement of the parties for an
additional two years by providing written notice to the other party
of the extension at least 90 days prior to the end of the term and the
agreement of the party receiving such notice by written notice to the
other party at least 45 days prior to the end of the then current term
of such agreement. The period of employment from the Effective Date
until the last date of employment (the "Termination Date") pursuant
to this Agreement is herein referred to as the "Term".
3. Employee Duties: Employee shall devote his full time and
attention to the business and affairs of the Company's Torbal Scales
Division, performing those duties typically necessary for the
management and performance of tasks to effect and to ensure the
smooth running of the Company's Torbal Scales Division's operations,
including duties related to, but not limited to, sales, marketing,
production, engineering and administration, in each case as reasonably
designated by the Company's Chief Executive Officer (the "CEO") or
the Executive Vice-President of the Company related to the Scale and
Balance Business, as defined above,
operating from a facility located in New Jersey, and to travel
as may reasonably be required in performance of the duties.
In addition, as time permits, Employee shall perform tasks
related to the Company's marketing efforts as reasonably required
and requested by the Company's CEO. He shall report directly
to the Chief Executive Officer of the Company.
4. Compensation: During the Term, Employee shall be paid by the
Company a salary at the rate of $140,000 per annum payable in equal
installments consistent with the salary installments payable to other
regular employees, currently weekly. The salary shall be adjusted on
each anniversary of the Effective Date commencing with the second
year of the Term to reflect the percentage increase, if any, in the
Consumer Price Index for all urban consumers as published by the U.S.
Bureau of Labor Statistics ("CPI") at the end of the immediately
preceding year over the CPI as of the beginning of such year
(measured in each case from the nearest date on or prior to the
relevant anniversary date of the Term for which CPI data is
published). At the sole and absolute discretion of the Board of
Directors, the Company may pay Employee a bonus in addition to the
foregoing compensation in recognition of his services and the
results of the Company's operation for each fiscal year of the
Company during the Term (pro rata for year ending June 30, 2014).
5. Expenses: Subject to the approval of the President or CEO
of the Company, Employee is authorized to incur reasonable and
necessary expenses in connection with the discharge of his duties
and in promoting the business of the Company, including travel
expenses to travel between the Company's New Jersey location and
the Bohemia, NY headquarters reimbursable at the current IRS
mileage rate, plus tolls. During the Term, the Company will
provide Employee with a cellular phone and a laptop computer.
All equipment including computers and telephones provided to
Employee by the Company for fulfillment of his duties shall
remain the property of the Company and shall, at the request
of the Company, upon expiration or early termination of the
Term be promptly delivered to the Company.
6. Options. The Company agrees to grant to Employee under
its 2012 Stock Option Plan (the "Plan") qualified stock options
("QSOs") to purchase 2,000 shares of its Common Stock exercisable
at the per share price equal to the fair market value on the
Effective Date as determined under the Plan. Scientific agrees
to grant to Employee (i) on the first anniversary of the Effective
Date, QSOs to purchase 4,000 shares of Company Common Stock, (ii)
on the second anniversary of the Effective Date, QSOs to purchase
5,000 shares of Company Common Stock, and (iii) on the third
anniversary of the Effective Date, QSOs to purchase 6,000 shares
of the Company's Commons Stock, in each case subject to the
continued employment of Employee under this Agreement as of such
dates and in each case such QSOs shall be fully vested as of the
relevant grant date and shall have an exercise price equal to
the fair market value of a share of Common Stock as of the
relevant grant date as determined under the Plan.
7. Other Benefits: During the Term, Employee shall be
entitled to receive benefits from the Company consistent with
those provided to other employees of the Company having similar
periods of service, including medical, hospital, dental, life,
disability benefits, 401(K), four weeks paid vacation, and sick
leave, subject in each instance to eligibility standards.
8. Termination By the Company Due to Death, Disability or
Cause; Termination by Employee for Good Reason or the Company
Without Cause:
a. In the event of Employee's death during the Term, this
Agreement shall terminate automatically as of the date of death,
except with respect to any accrued but unsatisfied obligations
as to salary, benefits (other than the grant of options pursuant
to Section 6) and expense reimbursements to the date of death.
b. In the event of the Employee's Disability (as hereinafter
defined) during the Term for ninety (90) consecutive calendar
days or one hundred twenty (120) calendar days in the aggregate
during any consecutive twelve (12) month period, the Company
shall have the right, by written notice to Employee, to terminate
this Agreement effective upon delivery of such notice to Employee.
Employee shall be entitled to receive all accrued but unsatisfied
obligations as to salary, benefits, and expense reimbursements
as of the effective date of such termination. "Disability" for
the purposes of this Agreement shall mean Employee's physical
or mental disability, as determined in good faith by the President
or CEO, and confirmed by a medical provider, in the field of the
claimed Disability, of the Company's choice, reasonably acceptable
to Employee (or his legal representative), so as to render him
incapable of carrying out his essential duties under this Contract.
c. The Company shall have the right to discharge Employee
and terminate this Agreement (except Paragraphs 9 and 10 shall
survive any such termination and remain in full force and effect),
for "Cause" (as hereinafter defined) (i) if capable of cure, upon
the failure of Employee to cure the Cause by the end of the thirtieth
(30th) day following delivery of written notice of such termination
to Employee setting forth the Cause or (ii) if not capable of cure,
immediately upon delivery of written notice of such termination to
Employee setting forth the Cause. "Cause" shall mean (A) Employee's
commission of a felony or entry of a plea of nolo contendere to a
felony charge, (B) gross neglect or gross misconduct (including
conflict of interest) in the carrying out of Employee's duties
under this Agreement, (C) Employee's failure, refusal or neglect
to perform Employee's duties in accordance with Paragraph 3 hereof,
(D) engaging in an act or acts of dishonesty affecting the Company
or its subsidiaries, (E) alcohol abuse or the illegal use of drugs,
or (F) Employee's material breach of this Agreement, in each case
in a manner materially interfering with performance of Employee's
obligations under this Agreement.
d. Employee may terminate his employment for "good reason"
in the event of (i) material breach by the Company of this Agreement,
or (ii) a significant change in Employee's responsibilities or
duties, in either case, which breach or change remains uncured for
a period of thirty (30) days following the Company's receipt
of written notice of such breach.
e. In the event of a termination of Employee's employment under
this Agreement by the Company without "Cause" or termination by
Employee for "good reason" pursuant to Paragraph 8(d) above, the
Company shall (i) pay to Employee (A) Severance Pay (as defined below),
(B) salary and benefits accrued and payable up to the date of such
termination, and (C) reimbursement of those expenses accrued and
payable under Paragraph 7 hereof through the effective termination
date; and (ii) continue to provide Employee with such health and
medical benefits required to be provided by the Company pursuant
to Paragraph 7 during the Term, for a period of twenty four (24)
months immediately following the effective date of Employee's
termination. Severance Pay shall be defined as one year's salary at
the rate of the compensation Employee is receiving at the time of
termination. All payments of Severance Pay shall be payable in
accordance with Company payroll practice (currently weekly) over
the 12-month period following the effective date
of Employee's termination
f. The Company agrees to provide Employee with an office
located within a 20-mile radius of employee's current residence
listed above provided, however, Employee may work from home to
the extent his presence at the Company's office is not required
in connection with the performance of his obligations under this
Agreement, subject to the reasonable consent of the Company.
..
9. Confidential Information.
a. Employee agrees that during and after the Term he will not,
directly or indirectly, disclose to any person, or use or otherwise
exploit for the benefit of Employee or for the benefit of anyone
other than the Company, any Confidential Information (as defined
in Paragraph 9(c)). Employee shall have no obligation hereunder to
keep confidential any Confidential Information if and to the extent
disclosure of any thereof is specifically required under applicable
law; provided, however, that in the event disclosure is so required,
Employee, to the extent legally permitted, shall provide the Company
with prompt notice of such requirement, prior to making any
disclosure, so that the Company may seek an appropriate protective
order.
b. At the request of the Company, Employee agrees to deliver to
the Company, at any time during the Term, or thereafter, all
Confidential Information which Employee may possess or control.
Employee agrees that all Confidential Information of the Company
(whether now or hereafter existing) conceived, discovered or made
by Employee during the Term exclusively belongs to the Company (and
not to Employee). Employee will promptly disclose such
Confidential Information to the Company and perform all actions
reasonably requested by the Company to establish and confirm such
exclusive ownership.
c. "Confidential Information" means any confidential information
of the Company or its subsidiaries or affiliates including, without
limitation, any patent, patent application, copyright, trademark,
trade name, service xxxx, service name, "know-how", trade secrets,
customer lists, vendor lists, customer pricing or terms, details of
client or consultant contracts, pricing policies, cost information,
operational methods, financial and accounting information, marketing
plans or strategies, product development techniques or plans,
business acquisition plans or any portion or phase of any business,
scientific or technical information, ideas, discoveries, designs,
computer programs (including source or object codes), processes,
procedures, formulae, improvements, information relating to the
products and services currently being sold, developed or
contemplated, by the Company, or which hereinafter may be sold,
developed or contemplated, by the Company through the date of
termination of the Term, including, but not limited to,
pharmaceutical or laboratory balances and scale products or
components, catalytic research instruments, mixers, including
vortex mixers, rotating, shaking or oscillating apparatuses;
thermoelectric apparatuses, sensors or bioreactor bags;
bioprocessing systems operations; or any industrial or
laboratory processes, apparatuses or equipment relating thereto
or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not
registered, and including all memoranda, notes, summaries,
plans, reports, records, documents and other evidence thereof.
The term "Confidential Information" does not include, and there
shall be no obligation hereunder with respect to, information
that becomes generally available to the public other than
as a result of a disclosure by Employee not permissible
hereunder.
d. Notwithstanding anything herein to the contrary, this
Paragraph 9 shall survive any termination of this Agreement.
10. Non-Competition.
a. Subject to the Company not then being in default of its
obligations under this Agreement, and subject to the provisions
of paragraph 8 of this Agreement,, Employee agrees that for a
period ending on a date which is twelve (12) months following
the last day of his employment by the Company or a subsidiary
of the Company (the "Non-Competition Period"), he shall not:
i. engage directly or indirectly in the "Restricted Area"
as defined below in: (x) the Scale and Balance Business; (y)
the business of developing, producing, marketing or selling:
(A) pharmaceutical and laboratory balances or scales or
components, or (B) items (products or services) which the
Company or one of its subsidiaries or an affiliate thereof
during the Term is developing, producing, marketing or selling,
or (C) items (products or services) which the Company has
advised Employee during the Term, it or a subsidiary or
affiliate intends to produce or sell
(collectively the
"Non-Competition Activities") or;
ii. perform services (including without limitation as an
employee, independent contractor, officer, director or consultant)
for, or otherwise be engaged by or have any financial interest
in or affiliation with any individual, corporation, partnership
or any other entity substantially involved in the
Non-Competition Activities ("Competitor Entity") or;
iii. own, along with his affiliates, including parents,
siblings and members of their families, directly or indirectly
(the "Employee Group"), at least 2% in the aggregate of the
outstanding equity interests of any Competitor Entity; provided,
however, that nothing contained in this Paragraph 10(a) shall
prevent Employee from purchasing as an investment securities of any
corporation whose securities are regularly traded on any national
securities exchange or in the over-the-counter market if such
purchase would not result in the Employee Group owning at the
time of the purchase more than 3% of the outstanding equity
interests of the Competitor Entity.
"Restricted Area" shall mean the United States, Canada, Central
and South America.
b. During the Non-Competition Period and subject to the
Company's not being in material breach of the terms of this
Agreement, Employee shall not solicit or induce any employee of
the Company or a subsidiary or affiliate of the Company, to leave
its employ.
c. If the final judgment of a court of competent jurisdiction
declares that any term or provision of Paragraphs 10(a) or (b)
above, is invalid or unenforceable, the parties to this Agreement
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration
or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.
d. Notwithstanding anything herein to the contrary, this
Paragraph 10 shall survive any termination of this Agreement other
than as a result of a termination of Employee's employment (i)
by the Company without "Cause" during the initial three-year term
of this Agreement or any subsequent renewal term or (ii) by
Employee for "good reason" pursuant to Paragraph 8(e) of this
Agreement.
11. Remedies.
a. Nothing herein contained is intended to waive or diminish
any rights the Company may have at law or in equity at any time to
protect and defend its legitimate property interests including its
business relationships with third parties, the foregoing provisions
being intended to be in addition to and not in derogation or
limitation of any other rights it may have at law or in equity.
b. A breach by Employee of the provisions of Paragraphs 9
or 10 above, or the failure of the Employee to discontinue any
action within two business days following written notice from the
Company to Employee to discontinue such action which if consummated
would constitute a breach of the provisions of Paragraphs 9 or 10
above, may cause the Company or any of its subsidiaries or
affiliates, irreparable injury and damage. Employee therefore
agrees that damages may be an inadequate remedy and the Company
on behalf of itself or its subsidiaries or affiliates shall be
entitled to injunctive and/or other equitable relief to prevent
any breach of such Paragraph of this Agreement and to secure its
enforcement, without being required to provide any security or
post any bond.
12. For Hire: The Company shall own forever and throughout
the world all rights of any kind or nature now or hereafter known
in and to all of the product of Employee's employment hereunder
in any capacity and any and all parts thereof, including, without
limitation, patents (exclusively during the current and renewed
or extended term of the patent issued anywhere in the world and
thereafter, non-exclusively), trade names, trademarks, copyrights
and all other property or property rights in or to any ideas,
concepts, designs, drawings, plans, prototypes, or any other
similar creative works and to the product of any or all of such
services, Employee acknowledging and agreeing that the foregoing
purposes, Employee is performing his services as the Company's
employee-for-hire. Without limiting the generality of the
previous sentence, Employee acknowledges and agrees that all
memoranda, notes, records, and other documents made or compiled
by Employee or made available to Employee during his employment
by the Company concerning the business of the Company and its
subsidiaries shall be the property of the Company or its
subsidiaries, as the case may be, and shall be delivered by
Employee to the Company, upon termination of this Agreement or
at any other time at the Company's request.
13. Notices: Any notices pertaining to this Agreement if to
the Company shall be addressed to: Scientific Industries, Inc.,
00 Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxx, 00000, Attention: Chief
Executive Officer, Fax no. 000-000-0000, with copy to be sent
to Xxxxxxx Xxxxxx & Xxxxxxxxxx LLC, 000 Xxxxx Xxxxxx, 00xx xxxxx,
Xxx Xxxx, XX 00000, Attention: Xxxx Xxxxxxx, Esq., Fax no.
000-000-0000; and if to Employee shall be addressed to Xxxx
Xxxxxxxxxxx, 000 Xxxxxxx Xx. Xxxxx Xxxxx XX 00000, with a
copy to Xxxxxxx X. Xxxxx Esq., 000 Xxxxxxx Xxxxxx, Xxxxxxx,
Xxx Xxxxxx 00000, Fax no. 000-000-0000. All notices shall
be in writing and shall be deemed duly given if personally
delivered or sent by registered or certified mail, overnight
or express mail or courier, or by e-mail or fax. If sent by
registered or certified mail, notice shall be deemed to have
been received and effective three days after mailing; if by
overnight or express mail or courier or by e-mail or fax (with
evidence of successful transmission/dispatch), notice shall
be deemed received the next business day after being sent.
Any party may change its address for notice hereunder by
giving notice of such change in the manner provided in this
Paragraph 13.
14. Entire Agreement: This Agreement contains the entire
agreement of the parties, respecting the subject matter
contained herein. No modification of any provision hereof
shall be effective except by a written agreement signed by the
parties hereto. This Agreement may be executed in counterparts
(each of which may be transmitted via facsimile) with the same
effect as if all parties had signed the same document, and all
counterparts shall be construed together and shall constitute
the same instrument.
15. Miscellaneous:
a. This Agreement shall be deemed to have been made in
the State of New York and shall be governed by and construed
in accordance with the laws of the State of New York without
regard to conflict of law rules thereof.
b. The Agreement shall be binding upon and inure to the
benefit of the parties, their respective successors, heirs
and assigns (where permitted).
c. The waiver by one party hereto of any breach by the
other (the "Breaching Party") of any provision of the Agreement
shall not operate or be construed as a waiver of any other
(prior or subsequent) breach by the Breaching Party, and waiver
of a breach of a provision in one instance shall not be deemed
a waiver of a breach of such provision in any other circumstance.
IN WITNESS WHEREFOR, the parties hereto have signed this Agreement
as of the year and date first above written.
SCIENTIFIC INDUSTRIES, INC.
/s/ Xxxxxx X. Xxxxxx
By:_________________________________________
Xxxxxx X. Xxxxxx
Chief Executive Officer
XXXX XXXXXXXXXXX
/s/ XXXX XXXXXXXXXXX
_____________________________________________
